In this blog post, Suprateek Neogi from Rajiv Gandhi National University of Law, Punjab talks in detail about music license agreement.

Have you ever wondered how artists give their music for usage on websites, apps and softwares like Gaana.com, iTunes, Spotify, YouTube etc? What is the exact procedure? What is copyright and how does it affect you as a listener? Is it illegal to download free music? Are torrents illegal, or is it their content which makes it controversial? What do we press “I agree” to while downloading/installing files from the internet?

This article will answer all the above-mentioned questions and more.

Introduction

The creators and producers of the music compositions own the exclusive copyrights to their works. They are permitted to give selective or absolute (depending upon their discretion) rights to a third party for usage of their composition for commercial purposes.

A copyright is basically the legal right to print, publish, perform, film, or record literary, artistic, or musical or any such creative material for a span of a few years, or even lifetime.

In simple terms, a music license agreement is a deal between a third party and the creator(s) for use of the composition, in exchange for money.

The third party is said to have obtained a “licence” for the usage of the composition(s). The above mentioned third party is referred to as the licensee. Section 2(j), in short, defines the term licence as the right to use benefits of having a copyright of a particular commodity.

These commercial purposes include, but are not restricted to, online usage, radio, films and podcasts. A well-drafted music license agreement is essential in making sure that the producers and creators of the music get their hard earned money from their work. This is ensured through royalties.

Royalty is a payment made to the legal owner for the use of property. The conditions upon which the royalties are awarded depend upon the license agreement between the parties. The royalty rate awarded to the musicians depend upon a variety of practical factors like their popularity, what the licensee deems as the worth of the composition, state of the market, available alternatives and so on.

Section 30 of the Indian Copyright Act, 1957 states that “the owner of the copyright in any existing work or the prospective owner of the copyright in any future work may grant any interest in the right by licence in writing signed by him or by his duly authorised agent”.

This basically means that the creator of the music may give permission to a third party for the usage of the benefits of a copyright of a commodity.

Purpose of a Music License Agreement

The main purpose of a music license agreement is to lend the copyrights of the musical composition to a third party, so they can use it for a commercial purpose. Music licenses are probably the only way through which music reaches a large audience transcending political and geographical boundaries in many cases. But is it feasible for every single artist to deal with the legal teams of every company who wants their music? In most cases, No. Hence, they appoint an agent in the form of a “copyright society” to do the same.

How Do Artists Earn Money or Royalties

As mentioned earlier, mostly, it is through granting licences. The entire legal process of granting licenses can be financially expensive and cumbersome for artists to handle individually. So, they register with “copyright societies” which collectively grant licenses to third parties, and pay the artists.

In India, various producers are registered with multiple societies like Phonographic Performance Ltd (PPL), Indian Performing Right Society Ltd (IPRS) etc. In the United states, Broadcast Music Inc. (BMI) and  American Society of Composers, Authors and Publishers (ASCAP) perform the same function.

How do artists give their music for usage on websites, apps and softwares like Gaana.com, iTunes, Spotify, YouTube etc? iTunes, Gaana.com and other such companies are the licencees for the music they exhibit on their websites/apps. This is done by signing a music licence agreement with the artists, composers, producers etc. for exclusive rights for their music. This is done through a copyright society.

A copyright society basically acts like a middleman for the transactions with the licensee. They interact with the radio channels, websites etc. on behalf of the producers.

How Are the Rights of the Copyright Holder Affected Upon Granting a Licence

This has been elaborated under Chapter VI of the Indian Copyright Act.

• The copyright society has the powers to give licences to the third parties and collect the licence fee.
  • They further have the right to distribute the fees amongst the artists after deducting their fee.
• The owner of the rights (i.e. the artists) have the right to withdraw such authorization from the society.
• The copyright society is allowed to work with foreign societies like the BMI for the granting of licences.

Can Possessors of Unlicensed Music be Held Liable Under Copyright Laws

Listening to music, or more importantly, downloading, from sites which do not have a licence to stream is an offence under Section 58 of the Indian Copyright act, 1957. This law is not easily enforced, as the copyright holder would have to “take proceedings for the recovery of possession thereof”. This is very tough to enforce due to the simple fact that illegal downloads are so widely prevalent.

Section 58 further makes sharing of music an offence, for example, if you legally download a song from a licensee, then you cannot give it to another.  Exceptions to this include purposes of “teaching, scholarship or research”.

The websites or apps where music can be streamed or downloaded legally have signed music licence agreements with the owners of the copyrights. For proper usage of such rights, the portals make the end users agree to an agreement called an End-user Licence Agreement (EULA).

What Do We Agree to When We Press “I agree” While Downloading/Installing Files From the Internet

Nine times out of ten, we do not even give the EULA (also called “licence agreement” or “terms and conditions” in common parlance) a cursory glance before pressing the “I agree” button. The thought process is that the agreement cannot be harmful, can it? A layman feels that it is too much legal jargon to read just for a, say, 5-minute song or a 20MB app. But the fact remains that the agreement is legally binding, and it is always advisable to be aware about the contents of any agreement you are a party to.

EULA, as the name suggests, is the agreement between the end-user and the licensee of the music or such digital files that are being referred to. EULAs of renowned apps like iTunes, Safari and Google Chrome have gotten into trouble due to either redundant or misleading clauses in their EUCLAs.

• Apple
  Let’s take the example of clause (g) of Apple’s EULA. It asks the user to agree to not using Apple products for “the development, design, manufacture or production of nuclear, missiles, or chemical or biological weapons”. Beside being the butt of many jokes, the clause is highly redundant and has no use being on the EULA of a music sharing app. iTunes, an Apple product, recently updated their terms and conditions into a 56-page document. Making the agreements extremely verbose doesn’t help anyone. The licensee is criticized for not being user-friendly, and the user cannot possibly be expected to read so much.

• Google Chromemusic license agreement
  “…you give Google a perpetual, irrevocable, worldwide, royalty-free, and non-exclusive license to reproduce, adapt, modify, translate, publish, publicly perform, publicly display and distribute any Content which you submit, post or display on or through, the Services” 

  Although this clause is now removed, Google Chrome’s EULA basically claimed to have an absolute licence to publicly display any information you enter into the browser. This makes no exception for bank account numbers, passwords and so on. The security and privacy risks this clause had exposed us to are innumerable.

Torrent – Myth vs Reality

A torrent is something we all have used, but most are clueless about. A torrent involves a file distribution system. Without going into too much technical jargon, a torrent is basically a computer file which contains metadata (in simple terms, information) about digital files, like music, videos etc., which are available for transfer and download by multiple users.

The difference between torrents and normal downloads is that torrents are downloaded from multiple servers, while a regular download uses a single server for download. A torrent finds multiple computers with the file, and “seeds” the content. So, while downloading a torrent, we download from other users who have previously downloaded the same file.

Downloading files through torrents is not illegal, but not all the free content found on the websites is available legally, as mentioned earlier. For example, the latest episode of the world famous show, Sherlock, premiered in India on the 7th of January, but was available on torrent websites from the 1st itself. This was possible through illegal torrents. Section 58 of the Indian Copyright Act would apply here too.

Royalty Free Music

Some artists give certain websites and apps licence to let the users download free music legally. Limited licences are accorded to the website for selective use of the music. An example of such a site is jamendo.com. It has provisions for buying of licences for personal, online or even large scale use. The image illustrates upon the same.

Websites like SoundCloud and Saavn have licences for free streaming of music, and further, some artists give licencing for downloads. They further their revenue by showing advertisements on their websites.

SoundCloud and Apple from an Intellectual Property Laws Perspective

A Breakdown of SoundCloud’s “Terms of Use”

SoundCloud is an online audio streaming website which offers free audio content for streaming and certain content is even available for free download upon the discretion of the uploader.

I have chosen SoundCloud because it is an app solely dedicated to audio uploads (unlike YouTube, which is more popular, but is a video uploading site) because it is very easily accessible for independent and upcoming artists too.

• The Grant of Licence section on their website clearly states that when you upload your music on SoundCloud, you give them the right to store and host your content on their server, while at the same time, you may “authorize the use, ways of reproduction, transmission, distribution, public display, public performance, making available (including whether users will be permitted to listen to your Content offline) and other communication to the public of Your Content on the Platform and elsewhere using the Services”.
  • This basically means that upon uploading, SoundCloud can store and display your content, but only in the way you want them to.
• “By uploading Your Content to the Platform, you also grant a limited, worldwide, non-exclusive, royalty-free, fully paid up, license to other users of the Platform, and to operators and users of any other websites, apps and/or platforms to which Your Content has been shared or embedded using the Services (“Linked Services”), to use, copy, listen to offline, repost, transmit or otherwise distribute, publicly display, publicly perform, adapt, prepare derivative works of, compile, make available and otherwise communicate to the public, Your Content utilizing the features of the Platform from time to time and within the parameters set by you using the Services”
  • A legally sound way of informing the uploader of restating the fact that worldwide listeners get free access of streaming of online music also.
  • The clause also mentions that users can share the music on other social media like Facebook, Twitter and so on.
• It further states that there are different types of licences which can vary with each content.

• It prohibits reproduction or redistribution, or even download of the content which the uploader has not given permission for. Such usage is possible through third-party software, which is prohibited.

• Objectionable content which may “be abusive, libellous, defamatory, pornographic or obscene, that promotes or incites violence, terrorism, illegal acts, or hatred on the grounds of race, ethnicity, cultural identity, religious belief, disability, gender, identity or sexual orientation” is not allowed to be uploaded.
  • The clause further bars any content contrary to law.
  • Such content can be removed upon the discretion of SoundCloud.
• Removal of the uploaded content will automatically lead to deletion of the content from SoundCloud’s servers.

• SoundCloud further prohibits the transfer of an account to another person or a third party.

A breakdown of Apple’s “Terms of Use”

Apple’s EULA has been under criticism for being too long and textual, which dissuades even the more determined users from trying to read it. This section provides a breakdown of the same.

• “Each Transaction is an electronic contract between you and Apple, and/or you and the entity providing the Content on our Services”
  • This clause basically means that for every transaction, whether free of charge or not, is a legally actionable process.
• Apple only permits the usage of its content for “personal, non-commercial purposes”, and also specifies that Apple cannot be held responsible if the content downloaded is misplaced or lost.
  • Basically, it means that if your music gets deleted, Apple would not refund or replace the same.
  • Apple permits re-downloads, and in fact, an entire clause is dedicated to the same.
• The content downloaded on “either (i) a single individual on one or more devices owned or controlled by an Enterprise; or (ii) multiple individuals on a single shared device owned or controlled by an Enterprise” have to be used ONLY by them.
  • This clause implies that sharing your downloaded content with your friends is in contravention to their EULA.
• “You can have 10 devices (but only a maximum of 5 computers) signed in with your Apple ID at one time”. It further states that “You can use Content from up to five different Apple IDs on each device”

• Apple disallows posting of any material that is objectionable, offensive, unlicensed, infringing upon privacy, unlawful etc.
  • This is emphasised by “not use these products for any purposes prohibited by United States law, including, without limitation, the development, design, manufacture, or production of nuclear, missile, or chemical or biological weapons”
    • Although, redundant, it emphasises on the very important point.
  • The EULA reiterates that the content accessed here is licensed, not sold to you.
    • It further disallows resale or forwarding of the content.
  • Failing to comply to the terms leads to a termination of the license.

Comparison

• A common feature between the terms of use of both the products is that both are agreeing on the aspect of what sort of content should not be allowed online. Another aspect is that both reiterate the importance of anti-piracy measures.
  • Although SoundCloud does not specifically mention “nuclear weapons” et al, it is covered under “unlawful” activities
• Apple puts a limit on the number of devices which can work with one Apple ID, and further states the maximum Apple IDs permissible with one computer.

• SoundCloud has most of its features available for free, but Apple’s services are mostly paid.

Checklist of a Music License Agreement

This section gives a few details about the clauses of a basic music license agreement.

License grant

The license grant defines the nature of the agreement and license accorded to the licensee. A badly worded license grant can be very detrimental to the agreement. The following are important to make sure that doesn’t happen –

• It should list out the acts and omissions that the licensee is permitted to perform. Even the tiniest of the details should be mentioned.
• Each word used in a license grant should be of importance and convey a meaning to the reader of the agreement.
  • Uselessly elongating the text of any legal document is detrimental for understanding the texts, and this is applicable in case of this section too.
  • Usage of excessive adjectives in this section are unnecessary, as some facts can be mentioned in later sections for clarity.
• Parts of a license grant
  • Rights granted – e.g. whether the right is non-exclusive or absolute, territory where it’s applicable and so on.
  • Licensee’s rights and obligation
  • Payments to be made
  • Other miscellaneous topics

An example of rights granted in a license grant is as follows. This agreement is with respect to the music rights accorded to a particular game.

A. Rights Granted COMPOSER hereby grants to MM, its successors and assigns, subject to the payments set forth in Section D, the exclusive, irrevocable and perpetual (except as provided in Section F) right, license and privilege throughout the [identify the countries in which INTELLECTUAL PROPERTY CO. shall have these rights] (“Territory”) to: 1. record and rerecord in each country of the Territory any or all of the SONGS only in synchronism or time relation with the visual materials prepared by INTELLECTUAL PROPERTY CO. for the GAME, and to reproduce, distribute, import and sell said GAME on CD-ROM or CD-I, or electronically, throughout the Territory. 2. record and rerecord in each country of the Territory any or all of COMPOSER’s rendition of the SONGS only in synchronism or time relation with the visual materials prepared by INTELLECTUAL PROPERTY CO. for the GAME, and to reproduce, distribute, import and sell said GAME on CD-ROM or CD-I, or electronically, throughout the Territory. 3. port the GAME onto any CD-ROM or CD-I platform now known or later developed during the term of this agreement and exercise the rights granted in paragraphs 1 and 2 above in connection with the ported version of the GAME; 4. publicly perform and authorize others to perform the GAME (and the SONGS contained therein) in connection with the advertising, publicizing, marketing and distribution of the GAME; and

The above-mentioned text is an example of a part of the license grant in a music license contract. The agreement further goes on to mention the composer’s rights and obligations. A license grant is applicable for a particular “term”. This has been further defined in the next sub-section.

Term and Termination

The “term” of the agreement specifies the effective date from which the agreement begins, and also the date of its end. The following is an example of the term and termination part of a music license agreement. This is a part of the agreement whose license grants section was quoted earlier.

TERM OF AGREEMENT: Effective Date is_______. For______ years/months/day (as agreed), until (specify date)_____; or For the life of a specific patent or other intellectual property________; or Until some future event (specify)______________________________

Assignment

When a third party becomes a beneficiary of the contract, they may not be able to enforce their rights. With this clause, the benefits, along with liabilities are also transferred to the third party. With this clause, in terms of any breach, the third party may also be sued for damages.

An example of a general assignment clause:

1.    Rights arising out of or under this deed are not assignable by one party without the prior written consent of the other party. 2.    A party must not unreasonably withhold its consent./ A party may withhold consent in its absolute discretion. 3.    A breach of clause 6.7(a) by one party entitles the other party to terminate this deed. 4.    Clause 6.7(c) does not affect the construction of any other part of this deed.

Warranty and Indemnification

• In simple terms, warranting something means that you’re claiming that the party will hold true to the agreement, and is saying the truth.
• It should include a point confirming that no defamatory or illegal activity is solicited with respect to the agreement, which may harm the other party.
• Clause should include the term “best of the party’s knowledge”, as it secures the party against any wrongdoing they were not aware of.
• The clause may go further and mention the amount of compensation to be awarded to the licenser, or the composer, for any infringement of the terms of the agreement.
  • It is highly advisable to have such a clause, as this gives assurance of justice to the composer in this era of rampant piracy of music.
    • This should not be mentioned in such a way that may come out as combative.

Consideration

This section includes the clauses about the royalty to be paid to the artists at al, the remuneration for the licensee and so on. This clause handles the payments of both the parties, and hence, the commercial importance of the clause cannot be understated.

Conclusion

Music licence agreements affect the daily lives of practically everyone who listens to music, which is basically, everyone. Every time one downloads a song, whether legally or illegally, the intellectual property laws apply. Music license agreements are the bread and butter for most artists who are practicing on a large scale. With the vast popularity of music, and sadly, pirated music, a lot of their work is going un-remunerated.

What needs to be done, is improving the implementation of law enforcement regarding the music industry. Section 58 of the Indian Copyright Act is not enough, the practicality of implementation renders it mostly redundant.

A well-drafted music licence agreement lead to the musicians getting their hard earned money in this cutthroat industry with immense competition and less opportunities to shine. Spreading of awareness might help with the plight.

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